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Evaluating Fiscal Policy: A Rule of Thumb

Nicolas Carnot

Evaluating Fiscal Policy: A Rule of Thumbpdf(4 MB) Choose translations of the previous link 

This paper introduces a simple rule for appraising the economic soundness of fiscal policies. It connects fiscal policy to a long-run debt objective, taken as an anchor, while arbitraging symmetrically between this debt objective and output stabilisation. The rule offers a benchmark to assess the evolution of primary expenditure, net of the impact of discretionary revenue measures, taken as a proper operational target for annual fiscal policy. The properties and implications of this rule of thumb are analysed drawing on qualitative arguments and retrospective simulations.

Summary for non-specialistspdf(25 kB) Choose translations of the previous link 

(European Economy. Economic Papers. 526. August 2014. Brussels. PDF. 48pp. Tab. Graph. Ann. Bibliogr. Free.)

KC-AI-14-526-EN-N (online)KC-AI-14-526-EN-C (print)
ISBN 978-92-79-35175-4 (online)ISBN 978-92-79-36140-1 (print)
doi:10.2765/70540 (online)doi:10.2765/80362 (print)

JEL classification: E62, H60, H77

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